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H.B. Fuller Reports Third Quarter Fiscal 2022 Results

September, 21, 2022

Net Revenue Growth of 13.8%; Organic Growth of 18.4% Year-on-Year

Reported EPS (diluted) of $0.84; Adjusted EPS (diluted) of $1.06, Up 34% Year-on-Year

Adjusted EBITDA of $138 million, up 24% y-on-y; Adjusted EBITDA Margin Increased 120 basis points y-on-y

Company Increasing FY2022 Adjusted EBITDA Expectations to a range of $540 to $550 million; 16% - 18% Growth

H.B. Fuller Company (NYSE: FUL) today reported financial results for its third quarter that ended August 27, 2022.

Third Quarter 2022 Noteworthy Items:

  • Net revenue grew 13.8% year-on-year, with organic revenue increasing 18.4% year-on-year with strong organic growth in all operating segments;
  • Gross margin was 26.5%; Adjusted gross margin of 26.5% expanded 280 basis points year-on-year, driven by strong pricing execution to recover raw material cost inflation;
  • Net Income was $46.5 million; Adjusted EBITDA of $137.7 million was up 24.4% year-on-year and adjusted EBITDA margin was up 120 basis points;
  • Reported EPS (diluted) was $0.84; Adjusted EPS (diluted) was $1.06, increasing 34.2% versus the prior year.

Summary of Third Quarter 2022 Results:

Net revenue for the third quarter of fiscal 2022 was $941.2 million, up 13.8% versus the third quarter of fiscal 2021. Robust pricing actions to recover unprecedented raw material cost inflation increased net revenue by 18.7 percentage points. As expected, volume was down 0.3% as a result of slowing economic conditions, offset by market share gains. As a result, organic revenue increased 18.4% versus the third quarter of fiscal 2021. Unfavorable foreign currency exchange rates reduced net revenue growth by 6.6 percentage points, while acquisitions increased net revenue growth by 2.0 percentage points. On a year-on-year basis, Hygiene, Health and Consumable Adhesives organic revenue increased 22.9%, Engineering Adhesives organic revenue increased 17.5%, and Construction Adhesives organic revenue increased 6.9%.

Gross profit in the third quarter of fiscal 2022 was $249.2 million. Adjusted gross profit in the third quarter of fiscal 2022 was $249.8 million. Adjusted gross profit margin of 26.5% increased 280 basis points year-on-year. Strong pricing actions to recover raw material cost inflation, as well as operating efficiencies, drove adjusted gross margin higher year-on-year.

Selling, general and administrative (SG&A) expense was $161.2 million in the third quarter of fiscal 2022 and adjusted SG&A was $156.2 million. Adjusted SG&A as a percent of net revenue increased 100 basis points versus the third quarter of last year. The increase in SG&A, as a percentage of net revenue, was largely driven by higher variable compensation and higher travel related expenses following the pandemic driven slowdown in travel.

Net income attributable to H.B. Fuller for the third quarter of fiscal 2022 was $46.5 million, or $0.84 per diluted share. Adjusted net income attributable to H.B. Fuller for the third quarter of fiscal 2022 was $58.3 million, up 35.9% year-on-year. Adjusted EPS was $1.06 per diluted share, up $0.27 or 34.2% year-on-year, reflecting strong organic revenue growth and operating efficiencies which more than offset the unfavorable impact of currency and higher interest rates.

Adjusted EBITDA in the third quarter of fiscal 2022 was $137.7 million, up 24.4% compared with the third quarter of last year. Adjusted EBITDA margin increased 120 basis points year-on-year from 13.4% to 14.6%. Strong pricing actions, continued strategic mix shift towards more highly-specified products, and operational discipline drove the improvement year-on-year.

“Our strong organic growth and improved profitability in the third quarter serve as additional proof points that our strategy is working, particularly in light of continued raw material inflation and currency headwinds from the strong dollar,” said Jim Owens, H.B. Fuller president and chief executive officer. “Our innovation driven market share gains and mix shift to a more highly specified product portfolio through innovation and strategic M&A, coupled with our responsible pricing actions, are delivering significant improvement to our financial results.

“Our underlying market share gains are enabling us to drive a more favorable volume performance in the marketplace and position us well as the rate of raw material inflation subsides. These share gains will endure and should grow as we execute our strategy. At the same time, our ability to substitute adhesive technologies greatly improves with supply chain normalization and allows us to provide competitive offerings while improving margins. These substitution capabilities, combined with the pricing actions we have taken throughout this unprecedented inflationary environment, will enable us to grow organic revenues and expand margins in recessionary economic environments.

“We have very effectively managed both economic and currency headwinds and we remain on track to achieve significant double-digit EPS growth and EBITDA growth at the top end of the range we provided in the first quarter. We are performing exceptionally well, and we are uniquely positioned to continue to deliver above-market organic growth while expanding our margins,” concluded Owens.

Balance Sheet and Cash Flow Items:

At the end of the third quarter of fiscal 2022 net debt was $1,857 million, down $10 million sequentially versus the second quarter. Cash flow from operations in the quarter was $58 million, up $49 million sequentially reflecting strong revenue growth and improving margins but down versus last year due to higher year-on-year working capital requirements.

Fiscal 2022 Outlook:

  • Company is increasing full-year expectations for adjusted EBITDA, despite slower economic conditions, stronger U.S. Dollar, and continued raw material cost inflation;
  • Organic revenue growth for fiscal year 2022 is expected to be in the range of 17% to 18%, excluding the impact of the extra week;
  • Adjusted EBITDA for fiscal 2022 is expected to be in the range of $540 to $550 million, up from the previously provided range of $530 to $550 million and equating to growth of 16% to 18% versus fiscal year 2021;
  • Net interest expense for fiscal 2022 is expected to be between $80 and $85 million reflecting higher interest rates and the expectation of some opportunistic refinancing before the end of the year;
  • Adjusted EPS in the fourth quarter of fiscal 2022 is expected to be in the range of $1.15 to $1.30, resulting in fiscal year 2022 adjusted EPS increasing 19% to 23% year-on-year, despite the significantly stronger U.S. dollar and higher borrowing costs;
  • Working capital, as a percentage of annualized net revenue, is expected to be in the range of 16% to 17% by fiscal year-end, resulting in full-year cash flow from operations similar to the prior year.

Conference Call:

The company will hold a conference call on September 22, 2022, at 9:30 a.m. CT (10:30 a.m. ET) to discuss its results. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the company’s website at https://investors.hbfuller.com. Participants must register prior to accessing the webcast using this link and should do so at least 10 minutes prior to the start of the call to install and test any necessary software and audio connections. A telephone replay of the conference call will be available from 12:30 p.m. CT on September 22, 2022, through 10:59 p.m. CT on September 29, 2022. To access the telephone replay dial 1-800-770-2030 (toll free) or 1-647-362-9199, and enter Conference ID: 6370505.

Regulation G

The information presented in this earnings release regarding consolidated and segment organic revenue growth, operating income, adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative expense, adjusted income before income taxes and income from equity investments, adjusted income taxes, adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to U.S. generally accepted accounting principles (U.S. GAAP) and should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the company and its operating segments as well as the comparability of results to the results of other companies. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported U.S. GAAP results in the “Regulation G Reconciliation” tables in this press release with the exception of our forward-looking non-GAAP measures contained above in our Fiscal 2022 Guidance, which the company cannot reconcile to forward-looking GAAP results without unreasonable effort.

About H.B. Fuller

Since 1887, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. With fiscal 2021 net revenue of $3.3 billion, H.B. Fuller’s commitment to innovation and sustainable adhesive solutions brings together people, products and processes that answer and solve some of the world's biggest challenges. Our reliable, responsive service creates lasting, rewarding connections with customers in electronics, disposable hygiene, medical, transportation, aerospace, clean energy, packaging, construction, woodworking, general industries and other consumer businesses. And, our promise to our people connects them with opportunities to innovate and thrive. For more information, visit us at https://www.hbfuller.com.

Safe Harbor for Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” "target," “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words or phrases. These statements are subject to various risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including but not limited to the following: the consequences of the COVID-19 outbreak and other pandemics on our operations and financial results; the impact on the supply chain, raw material costs and pricing of our products due to the Russia-Ukraine war; the impact on our margins and product demand due to inflationary pressures; the substantial amount of debt we have incurred to finance our acquisition of Royal, our ability to repay or refinance our debt or to incur additional debt in the future, our need for a significant amount of cash to service and repay the debt and to pay dividends on our common stock, the effect of debt covenants that limit the discretion of management in operating the business or in paying dividends; our ability to pay dividends and to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; our ability to achieve expected synergies, cost savings and operating efficiencies from our restructuring initiatives and operational improvement projects within the expected time frames or at all; our ability to effectively implement Project ONE; uncertain political and economic conditions; fluctuations in product demand; competing products and pricing; our geographic and product mix; availability and price of raw materials; disruptions to our relationships with our major customers and suppliers; failures in our information technology systems; regulatory compliance across our global footprint; trade policies and economic sanctions impacting our markets; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and investigations, including for product liability and environmental matters; impairment charges on our goodwill or long-lived assets; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Many of the foregoing risks and uncertainties are, and will be, exacerbated by COVID-19 and the Russia-Ukraine war and the resulting deterioration of the global business and economic environment.

Additional information about these various risks and uncertainties can be found in the “Risk Factors” section of our Form 10-K filings, and any updates to the risk factors in our Form 10-Q and 8-K filings with the SEC, but there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material impact on the business. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

 

Three
Months
Ended

 

Percent of

 

Three
Months
Ended

 

Percent of

 

 

August 27,
2022

 

Net
Revenue

 

August 28,
2021

 

Net
Revenue

Net revenue

 

$

941,230

 

 

 

100.0

%

 

$

826,830

 

 

 

100.0

%

Cost of sales

 

 

(692,066

)

 

 

(73.5

)%

 

 

(632,880

)

 

 

(76.5

)%

Gross profit

 

 

249,164

 

 

 

26.5

%

 

 

193,950

 

 

 

23.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(161,210

)

 

 

(17.1

)%

 

 

(134,497

)

 

 

(16.3

)%

Other income, net

 

 

6,559

 

 

 

0.7

%

 

 

6,150

 

 

 

0.7

%

Interest expense

 

 

(23,450

)

 

 

(2.5

)%

 

 

(19,396

)

 

 

(2.3

)%

Interest income

 

 

2,139

 

 

 

0.2

%

 

 

2,520

 

 

 

0.3

%

Income before income taxes and income from equity method investments

 

 

73,202

 

 

 

7.8

%

 

 

48,727

 

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(28,259

)

 

 

(3.0

)%

 

 

(19,095

)

 

 

(2.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

1,587

 

 

 

0.2

%

 

 

1,998

 

 

 

0.2

%

Net income including non-controlling interest

 

 

46,530

 

 

 

4.9

%

 

 

31,630

 

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(33

)

 

 

(0.0

)%

 

 

(14

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

46,497

 

 

 

4.9

%

 

$

31,616

 

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per common share attributable to H.B. Fuller

 

$

0.87

 

 

 

 

 

 

$

0.60

 

 

 

 

 

Diluted income per common share attributable to H.B. Fuller

 

$

0.84

 

 

 

 

 

 

$

0.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,644

 

 

 

 

 

 

 

53,049

 

 

 

 

 

Diluted

 

 

55,130

 

 

 

 

 

 

 

54,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.190

 

 

 

 

 

 

$

0.168

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

 

Nine
Months
Ended

 

Percent of

 

Nine
Months
Ended

 

Percent of

 

 

August 27,
2022

 

Net
Revenue

 

August 28,
2021

 

Net
Revenue

Net revenue

 

$

2,790,969

 

 

 

100.0

%

 

$

2,380,607

 

 

 

100.0

%

Cost of sales

 

 

(2,075,392

)

 

 

(74.4

)%

 

 

(1,776,744

)

 

 

(74.6

)%

Gross profit

 

 

715,577

 

 

 

25.6

%

 

 

603,863

 

 

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(483,109

)

 

 

(17.3

)%

 

 

(426,921

)

 

 

(17.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

12,701

 

 

 

0.5

%

 

 

25,899

 

 

 

1.1

%

Interest expense

 

 

(61,475

)

 

 

(2.2

)%

 

 

(59,699

)

 

 

(2.5

)%

Interest income

 

 

6,170

 

 

 

0.2

%

 

 

7,709

 

 

 

0.3

%

Income before income taxes and income from equity method investments

 

 

189,864

 

 

 

6.8

%

 

 

150,851

 

 

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

(62,023

)

 

 

(2.2

)%

 

 

(46,362

)

 

 

(1.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from equity method investments

 

 

4,236

 

 

 

0.2

%

 

 

6,071

 

 

 

0.3

%

Net income including non-controlling interest

 

 

132,077

 

 

 

4.7

%

 

 

110,560

 

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

 

(70

)

 

 

(0.0

)%

 

 

(51

)

 

 

(0.0

)%

Net income attributable to H.B. Fuller

 

$

132,007

 

 

 

4.7

%

 

$

110,509

 

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per common share attributable to H.B. Fuller

 

$

2.47

 

 

 

 

 

 

$

2.09

 

 

 

 

 

Diluted income per common share attributable to H.B. Fuller

 

$

2.39

 

 

 

 

 

 

$

2.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,498

 

 

 

 

 

 

 

52,794

 

 

 

 

 

Diluted

 

 

55,201

 

 

 

 

 

 

 

54,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.548

 

 

 

 

 

 

$

0.498

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 27,

 

 

August 28,

 

 

August 27,

 

 

August 28,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

 

$

46,497

 

 

$

31,616

 

 

$

132,007

 

 

$

110,509

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

1,138

 

 

 

901

 

 

 

9,008

 

 

 

2,277

 

Organizational realignment2

 

 

595

 

 

 

3,087

 

 

 

4,915

 

 

 

9,029

 

Royal restructuring and integration3

 

 

196

 

 

 

1,016

 

 

 

1,007

 

 

 

3,537

 

Project One

 

 

2,502

 

 

 

2,305

 

 

 

7,559

 

 

 

6,469

 

Other4

 

 

711

 

 

 

111

 

 

 

8,267

 

 

 

(3,701

)

Discrete tax items5

 

 

6,449

 

 

 

5,626

 

 

 

7,697

 

 

 

5,068

 

Income tax effect on adjustments6

 

 

251

 

 

 

(1,746

)

 

 

(6,786

)

 

 

(4,359

)

Adjusted net income attributable to H.B. Fuller7

 

 

58,339

 

 

 

42,916

 

 

 

163,674

 

 

 

128,829

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

23,450

 

 

 

19,412

 

 

 

61,501

 

 

 

59,769

 

Interest income

 

 

(2,139

)

 

 

(2,520

)

 

 

(6,181

)

 

 

(7,709

)

Adjusted Income taxes

 

 

21,559

 

 

 

15,216

 

 

 

61,112

 

 

 

45,653

 

Depreciation and Amortization expense8

 

 

36,491

 

 

 

35,705

 

 

 

108,925

 

 

 

106,596

 

Adjusted EBITDA7

 

 

137,700

 

 

 

110,729

 

 

 

389,031

 

 

 

333,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares

 

 

55,130

 

 

 

54,646

 

 

 

55,201

 

 

 

54,093

 

Adjusted diluted income per common share attributable to H.B. Fuller7

 

$

1.06

 

 

$

0.79

 

 

$

2.97

 

 

$

2.38

 

Revenue

 

$

941,230

 

 

$

826,830

 

 

$

2,790,969

 

 

$

2,380,607

 

Adjusted EBITDA margin7

 

 

14.6

%

 

 

13.4

%

 

 

13.9

%

 

 

14.0

%

1 Acquisition project costs include costs related to integrating and accounting for acquisitions.

2 Organizational realignment includes costs incurred as a direct result of the organizational realignment program, including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

3 Royal restructuring and integration program includes costs incurred as a direct result of the Royal restructuring and integration program including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

4 Other expenses, for the nine months ended August 27 2022, include a $3.3 million non-cash charge related to the wind down and settlement of the Company’s Canadian defined benefit pension plan, $1.3 million of hedging costs related to the Russian ruble devaluation driven by the war in Ukraine, $1.2 million of transactional tax expense associated with an audit settlement, other expenses for COVID-19 testing, vaccinations and exceptional medical claims, and non-cash gains and losses related to legal entity consolidations.

5 Discrete tax items are related to revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. Dollar and various foreign tax matters, offset by the tax effect of legal entity mergers.

6 Represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.

7 Adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted net income attributable to H.B. Fuller is defined as net income before the specific adjustments shown above. Adjusted diluted income per common share is defined as adjusted net income attributable to H.B. Fuller divided by the number of diluted common shares. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and the specific adjustments shown above. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. The table above provides a reconciliation of adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

8 Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in Adjusted net income attributable to H.B. Fuller totaling ($149) and ($292) for the three months ended August 27, 2022 and August 28, 2021, respectively and ($460) and ($1,026) for the nine months ended August 27, 2022 and August 28, 2021, respectively.

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 27,

 

 

August 28,

 

 

August 27,

 

 

August 28,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

424,978

 

 

$

369,439

 

 

$

1,252,405

 

 

$

1,069,922

 

Engineering Adhesives

 

 

378,264

 

 

 

342,300

 

 

 

1,137,587

 

 

 

1,000,337

 

Construction Adhesives

 

 

137,988

 

 

 

115,091

 

 

 

400,977

 

 

 

310,348

 

Corporate unallocated

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total H.B. Fuller

 

$

941,230

 

 

$

826,830

 

 

$

2,790,969

 

 

$

2,380,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Operating Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

47,470

 

 

$

29,652

 

 

$

122,950

 

 

$

98,493

 

Engineering Adhesives

 

 

39,776

 

 

 

34,087

 

 

 

115,266

 

 

 

96,580

 

Construction Adhesives

 

 

6,391

 

 

 

3,339

 

 

 

22,032

 

 

 

4,974

 

Corporate unallocated

 

 

(5,683

)

 

 

(7,625

)

 

 

(27,780

)

 

 

(23,105

)

Total H.B. Fuller

 

$

87,954

 

 

$

59,453

 

 

$

232,468

 

 

$

176,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

$

61,834

 

 

$

44,496

 

 

$

166,304

 

 

$

142,671

 

Engineering Adhesives

 

 

56,061

 

 

 

52,001

 

 

 

165,461

 

 

 

150,034

 

Construction Adhesives

 

 

19,619

 

 

 

14,247

 

 

 

59,616

 

 

 

37,785

 

Corporate unallocated

 

 

186

 

 

 

(15

)

 

 

(2,350

)

 

 

2,648

 

Total H.B. Fuller

 

$

137,700

 

 

$

110,729

 

 

$

389,031

 

 

$

333,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hygiene, Health and Consumable Adhesives

 

 

14.5

%

 

 

12.0

%

 

 

13.3

%

 

 

13.3

%

Engineering Adhesives

 

 

14.8

%

 

 

15.2

%

 

 

14.5

%

 

 

15.0

%

Construction Adhesives

 

 

14.2

%

 

 

12.4

%

 

 

14.9

%

 

 

12.2

%

Corporate unallocated

 

NMP

 

 

NMP

 

 

NMP

 

 

NMP

 

Total H.B. Fuller

 

 

14.6

%

 

 

13.4

%

 

 

13.9

%

 

 

14.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NMP = non-meaningful percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 27,

 

 

August 28,

 

 

August 27,

 

 

August 28,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Income before income taxes and income from equity method investments

 

$

73,202

 

 

$

48,727

 

 

$

189,864

 

 

$

150,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

1,138

 

 

 

901

 

 

 

9,008

 

 

 

2,277

 

Organizational realignment2

 

 

595

 

 

 

3,087

 

 

 

4,915

 

 

 

9,029

 

Royal restructuring and integration3

 

 

196

 

 

 

1,016

 

 

 

1,007

 

 

 

3,537

 

Project One

 

 

2,502

 

 

 

2,305

 

 

 

7,559

 

 

 

6,469

 

Other4

 

 

711

 

 

 

111

 

 

 

8,267

 

 

 

(3,701

)

Adjusted income before income taxes and income from equity method investments9

 

$

78,344

 

 

$

56,147

 

 

$

220,620

 

 

$

168,462

 

9 Adjusted income before income taxes and income from equity investments is a non-GAAP financial measure. Adjusted income before income taxes and income from equity investments is defined as income before income taxes and income from equity investments before the specific adjustments shown above. The table above provides a reconciliation of adjusted income before income taxes and income from equity investments to income before income taxes and income from equity investments, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 27,

 

 

August 28,

 

 

August 27,

 

 

August 28,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Income Taxes

 

$

(28,259

)

 

$

(19,095

)

 

$

(62,023

)

 

$

(46,362

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

55

 

 

 

(212

)

 

 

(2,154

)

 

 

(495

)

Organizational realignment2

 

 

29

 

 

 

(726

)

 

 

(1,140

)

 

 

(2,204

)

Royal restructuring and integration3

 

 

10

 

 

 

(239

)

 

 

(213

)

 

 

(846

)

Project One

 

 

122

 

 

 

(542

)

 

 

(1,284

)

 

 

(1,551

)

Other4

 

 

6,484

 

 

 

5,598

 

 

 

5,702

 

 

 

5,805

 

Adjusted income taxes10

 

$

(21,559

)

 

$

(15,216

)

 

$

(61,112

)

 

$

(45,653

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income before income taxes and income from equity method investments

 

$

78,344

 

 

$

56,147

 

 

$

220,620

 

 

$

168,462

 

Adjusted effective income tax rate10

 

 

27.5

%

 

 

27.1

%

 

 

27.7

%

 

 

27.1

%

10 Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes is defined as income taxes before the specific adjustments shown above. Adjusted effective income tax rate is defined as income taxes divided by adjusted income before income taxes and income from equity method investments. The table above provides a reconciliation of adjusted income taxes and adjusted effective income tax rate to income taxes, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 27,

 

 

August 28,

 

 

August 27,

 

 

August 28,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

941,230

 

 

$

826,830

 

 

$

2,790,969

 

 

$

2,380,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

249,164

 

 

$

193,950

 

 

$

715,577

 

 

$

603,863

 

Gross profit margin

 

 

26.5

%

 

 

23.5

%

 

 

25.6

%

 

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

(104

)

 

 

1

 

 

 

320

 

 

 

64

 

Organizational realignment2

 

 

214

 

 

 

1,472

 

 

 

1,997

 

 

 

2,265

 

Royal restructuring and integration3

 

 

5

 

 

 

644

 

 

 

377

 

 

 

1,962

 

Project ONE

 

 

-

 

 

 

(22

)

 

 

6

 

 

 

(22

)

Other4

 

 

533

 

 

 

247

 

 

 

1,358

 

 

 

1,635

 

Adjusted gross profit11

 

$

249,812

 

 

$

196,292

 

 

$

719,635

 

 

$

609,767

 

Adjusted gross profit margin11

 

 

26.5

%

 

 

23.7

%

 

 

25.8

%

 

 

25.6

%

11 Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit and adjusted gross profit margin is defined as gross profit and gross profit margin excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted gross profit and gross profit margin to gross profit and gross profit margin, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 27,

 

 

August 28,

 

 

August 27,

 

 

August 28,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

(161,210

)

 

$

(134,497

)

 

$

(483,109

)

 

$

(426,921

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

1,241

 

 

 

901

 

 

 

8,688

 

 

 

2,214

 

Organizational realignment2

 

 

630

 

 

 

1,614

 

 

 

4,134

 

 

 

6,819

 

Royal restructuring and integration3

 

 

191

 

 

 

388

 

 

 

656

 

 

 

1,644

 

Project ONE

 

 

2,502

 

 

 

2,327

 

 

 

7,553

 

 

 

6,491

 

Other4

 

 

471

 

 

 

55

 

 

 

2,691

 

 

 

32

 

Adjusted selling, general and administrative expenses12

 

$

(156,175

)

 

$

(129,212

)

 

$

(459,387

)

 

$

(409,721

)

12 Adjusted selling, general and administrative expenses is a non-GAAP financial measure. Adjusted selling, general and administrative expenses is defined as selling, general and administrative expenses excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted selling, general and administrative expenses to selling, general and administrative expenses, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

and Consumable

 

Engineering

 

Construction

 

 

 

 

 

Corporate

 

H.B. Fuller

August 27, 2022

 

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

 

$

50,378

 

 

$

41,927

 

 

$

8,718

 

 

$

101,023

 

 

$

(54,526

)

 

$

46,497

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,138

 

 

 

1,138

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

595

 

 

 

595

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

196

 

 

 

196

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,502

 

 

 

2,502

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

711

 

 

 

711

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,449

 

 

 

6,449

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

251

 

 

 

251

 

Adjusted net income attributable to H.B. Fuller7

 

 

50,378

 

 

 

41,927

 

 

 

8,718

 

 

 

101,023

 

 

 

(42,684

)

 

 

58,339

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,450

 

 

 

23,450

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,139

)

 

 

(2,139

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,559

 

 

 

21,559

 

Depreciation and amortization expense8

 

 

11,456

 

 

 

14,134

 

 

 

10,901

 

 

 

36,491

 

 

 

-

 

 

 

36,491

 

Adjusted EBITDA7

 

$

61,834

 

 

$

56,061

 

 

$

19,619

 

 

$

137,514

 

 

$

186

 

 

$

137,700

 

Revenue

 

$

424,978

 

 

$

378,264

 

 

$

137,988

 

 

$

941,230

 

 

 

-

 

 

$

941,230

 

Adjusted EBITDA Margin7

 

 

14.5

%

 

 

14.8

%

 

 

14.2

%

 

 

14.6

%

 

NMP

 

 

 

14.6

%

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 27, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

 

$

131,702

 

 

$

121,741

 

 

$

29,013

 

 

$

282,456

 

 

$

(150,449

)

 

$

132,007

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,008

 

 

 

9,008

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,915

 

 

 

4,915

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,007

 

 

 

1,007

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,559

 

 

 

7,559

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,267

 

 

 

8,267

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,697

 

 

 

7,697

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,786

)

 

 

(6,786

)

Adjusted net income attributable to H.B. Fuller7

 

 

131,702

 

 

 

121,741

 

 

 

29,013

 

 

 

282,456

 

 

 

(118,782

)

 

 

163,674

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,501

 

 

 

61,501

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,181

)

 

 

(6,181

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,112

 

 

 

61,112

 

Depreciation and amortization expense8

 

 

34,602

 

 

 

43,720

 

 

 

30,603

 

 

 

108,925

 

 

 

-

 

 

 

108,925

 

Adjusted EBITDA7

 

$

166,304

 

 

$

165,461

 

 

$

59,616

 

 

$

391,381

 

 

$

(2,350

)

 

$

389,031

 

Revenue

 

 

1,252,405

 

 

 

1,137,587

 

 

 

400,977

 

 

 

2,790,969

 

 

 

-

 

 

 

2,790,969

 

Adjusted EBITDA Margin7

 

 

13.3

%

 

 

14.5

%

 

 

14.9

%

 

 

14.0

%

 

NMP

 

 

 

13.9

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

 

 

Hygiene, Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended:

 

and Consumable

 

Engineering

 

Construction

 

 

 

 

 

Corporate

 

H.B. Fuller

August 28, 2021

 

Adhesives

 

Adhesives

 

Adhesives

 

Total

 

Unallocated

 

Consolidated

Net income attributable to H.B. Fuller

 

$

32,924

 

 

$

36,599

 

 

$

5,516

 

 

$

75,039

 

 

$

(43,423

)

 

$

31,616

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

901

 

 

 

901

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,087

 

 

 

3,087

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,016

 

 

 

1,016

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,305

 

 

 

2,305

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

111

 

 

 

111

 

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,626

 

 

 

5,626

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,746

)

 

 

(1,746

)

Adjusted net income attributable to H.B. Fuller7

 

 

32,924

 

 

 

36,599

 

 

 

5,516

 

 

 

75,039

 

 

 

(32,123

)

 

 

42,916

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

19,412

 

 

 

19,412

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,520

)

 

 

(2,520

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,216

 

 

 

15,216

 

Depreciation and amortization Expense8

 

 

11,572

 

 

 

15,402

 

 

 

8,731

 

 

 

35,705

 

 

 

-

 

 

 

35,705

 

Adjusted EBITDA7

 

$

44,496

 

 

$

52,001

 

 

$

14,247

 

 

$

110,744

 

 

$

(15

)

 

$

110,729

 

Revenue

 

$

369,439

 

 

$

342,300

 

 

$

115,091

 

 

$

826,830

 

 

 

-

 

 

$

826,830

 

Adjusted EBITDA Margin7

 

 

12.0

%

 

 

15.2

%

 

 

12.4

%

 

 

13.4

%

 

NMP

 

 

 

13.4

%

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 28, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to H.B. Fuller

 

$

108,291

 

 

$

104,099

 

 

$

11,504

 

 

$

223,894

 

 

$

(113,385

)

 

$

110,509

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition project costs1

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,277

 

 

 

2,277

 

Organizational realignment2

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,029

 

 

 

9,029

 

Royal Restructuring and integration3

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,537

 

 

 

3,537

 

Project One

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,469

 

 

 

6,469

 

Other4

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,701

)

 

 

(3,701

)

Discrete tax items5

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,068

 

 

 

5,068

 

Income tax effect on adjustments6

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,359

)

 

 

(4,359

)

Adjusted net income attributable to H.B. Fuller7

 

 

108,291

 

 

 

104,099

 

 

 

11,504

 

 

 

223,894

 

 

 

(95,065

)

 

 

128,829

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

59,769

 

 

 

59,769

 

Interest income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,709

)

 

 

(7,709

)

Adjusted Income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

45,653

 

 

 

45,653

 

Depreciation and amortization expense8

 

 

34,380

 

 

 

45,935

 

 

 

26,281

 

 

 

106,596

 

 

 

-

 

 

 

106,596

 

Adjusted EBITDA7

 

$

142,671

 

 

$

150,034

 

 

$

37,785

 

 

$

330,490

 

 

$

2,648

 

 

$

333,138

 

Revenue

 

$

1,069,922

 

 

$

1,000,337

 

 

$

310,348

 

 

$

2,380,607

 

 

 

-

 

 

$

2,380,607

 

Adjusted EBITDA Margin7

 

 

13.3

%

 

 

15.0

%

 

 

12.2

%

 

 

13.9

%

 

NMP

 

 

 

14.0

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

H.B. FULLER COMPANY AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

NET REVENUE GROWTH (DECLINE)

(unaudited)

 

 

Three Months
Ended

 

Nine Months
Ended

 

 

August 27,
2022

 

August 27,
2022

Price

 

 

18.7

%

 

 

17.6

%

Volume

 

 

(0.3

)%

 

 

2.8

%

Organic Growth13

 

 

18.4

%

 

 

20.4

%

M&A

 

 

2.0

%

 

 

1.6

%

Constant currency

 

 

20.4

%

 

 

22.0

%

F/X

 

 

(6.6

)%

 

 

(4.8

)%

Total H.B. Fuller Net Revenue Growth

 

 

13.8

%

 

 

17.2

%

Revenue growth versus 2022

 

Three Months Ended

 

Nine Months Ended

 

 

August 27, 2022

 

August 27, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

Net Revenue

 

F/X

 

Constant Currency

 

M&A

 

Growth 13

 

Net Revenue

 

F/X

 

Constant Currency

 

M&A

 

Growth 13

Hygiene, Health and Consumable Adhesives

 

 

15.1

%

 

 

(7.8

)%

 

 

22.9

%

 

 

0.0

%

 

 

22.9

%

 

 

17.0

%

 

 

(5.7

)%

 

 

22.7

%

 

 

0.0

%

 

 

22.7

%

Engineering Adhesives

 

 

10.5

%

 

 

(7.0

)%

 

 

17.5

%

 

 

0.0

%

 

 

17.5

%

 

 

13.7

%

 

 

(5.0

)%

 

 

18.7

%

 

 

0.0

%

 

 

18.7

%

Construction Adhesives

 

 

19.8

%

 

 

(1.3

)%

 

 

21.1

%

 

 

14.2

%

 

 

6.9

%

 

 

29.2

%

 

 

(1.0

)%

 

 

30.2

%

 

 

12.6

%

 

 

17.6

%

Total H.B. Fuller

 

 

13.8

%

 

 

(6.6

)%

 

 

20.4

%

 

 

2.0

%

 

 

18.4

%

 

 

17.2

%

 

 

(4.8

)%

 

 

22.0

%

 

 

1.6

%

 

 

20.4

%

13 We use the term “organic revenue” to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues and the revenues associated with acquisitions and divestitures.

CONSOLIDATED BALANCE SHEETS

H.B. Fuller Company and Subsidiaries

(In thousands, except share and per share amounts)

 

 

August 27,

 

November 27,

 

 

2022

 

2021

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

60,708

 

 

$

61,786

 

Trade receivables (net of allowances of $12,662 and $9,935, as of August 27, 2022 and November 27, 2021, respectively)

 

 

649,727

 

 

 

614,645

 

Inventories

 

 

547,278

 

 

 

448,404

 

Other current assets

 

 

163,213

 

 

 

96,335

 

Total current assets

 

 

1,420,926

 

 

 

1,221,170

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

1,526,602

 

 

 

1,500,989

 

Accumulated depreciation

 

 

(820,132

)

 

 

(805,622

)

Property, plant and equipment, net

 

 

706,470

 

 

 

695,367

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,375,964

 

 

 

1,298,845

 

Other intangibles, net

 

 

707,690

 

 

 

687,075

 

Other assets

 

 

360,588

 

 

 

372,073

 

Total assets

 

$

4,571,638

 

 

$

4,274,530

 

 

 

 

 

 

 

 

 

 

Liabilities, non-controlling interest and total equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

33,116

 

 

$

24,983

 

Trade payables

 

 

485,479

 

 

 

500,321

 

Accrued compensation

 

 

88,744

 

 

 

109,542

 

Income taxes payable

 

 

42,792

 

 

 

15,943

 

Other accrued expenses

 

 

87,260

 

 

 

86,061

 

Total current liabilities

 

 

737,391

 

 

 

736,850

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,885,041

 

 

 

1,591,479

 

Accrued pension liabilities

 

 

66,704

 

 

 

71,651

 

Other liabilities

 

 

303,817

 

 

 

277,190

 

Total liabilities

 

 

2,992,953

 

 

 

2,677,170

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

H.B. Fuller stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock (no shares outstanding) shares authorized – 10,045,900

 

 

-

 

 

 

-

 

Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 53,298,831 and 52,777,753 as of August 27, 2022 and November 27, 2021, respectively

 

 

53,299

 

 

 

52,778

 

Additional paid-in capital

 

 

245,826

 

 

 

213,637

 

Retained earnings

 

 

1,703,278

 

 

 

1,600,601

 

Accumulated other comprehensive loss

 

 

(424,312

)

 

 

(270,247

)

Total H.B. Fuller stockholders' equity

 

 

1,578,091

 

 

 

1,596,769

 

Non-controlling interest

 

 

594

 

 

 

591

 

Total equity

 

 

1,578,685

 

 

 

1,597,360

 

Total liabilities, non-controlling interest and total equity

 

$

4,571,638

 

 

$

4,274,530

 

CONSOLIDATED STATEMENTS of CASH FLOWS

H.B. Fuller Company and Subsidiaries

(In thousands)

 

 

Nine Months Ended

 

 

August 27, 2022

 

August 28, 2021

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income including non-controlling interest

 

$

132,077

 

 

$

110,560

 

Adjustments to reconcile net income including non-controlling interest to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

54,297

 

 

 

54,158

 

Amortization

 

 

55,088

 

 

 

53,464

 

Deferred income taxes

 

 

(4,968

)

 

 

(1,547

)

Income from equity method investments, net of dividends received

 

 

1,420

 

 

 

4,363

 

Loss (gain) on sale or disposal of assets

 

 

(1,130

)

 

 

641

 

Share-based compensation

 

 

20,358

 

 

 

19,400

 

Pension and other post-retirement benefit plan activity

 

 

(15,324

)

 

 

(23,192

)

Change in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

 

Trade receivables, net

 

 

(51,629

)

 

 

(61,900

)

Inventories

 

 

(112,390

)

 

 

(141,112

)

Other assets

 

 

(40,329

)

 

 

(26,060

)

Trade payables

 

 

17,381

 

 

 

176,210

 

Accrued compensation

 

 

(17,275

)

 

 

(1,283

)

Other accrued expenses

 

 

1,614

 

 

(2,292

)

Income taxes payable

 

 

10,201

 

 

 

1,001

 

Other liabilities

 

 

(35,940

)

 

 

(53,498

)

Other

 

 

35,246

 

 

 

52,221

 

Net cash provided by operating activities

 

 

48,697

 

 

 

161,134

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchased property, plant and equipment

 

 

(98,352

)

 

 

(77,237

)

Purchased businesses, net of cash acquired

 

 

(242,870

)

 

 

(5,445

)

Proceeds from sale of property, plant and equipment

 

 

1,281

 

 

 

2,751

 

Cash received from government grant

 

 

3,928

 

 

 

5,800

 

Cash payments related to government grant

 

 

-

 

 

 

(1,526

)

Net cash used in investing activities

 

 

(336,013

)

 

 

(75,657

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from debt

 

 

335,000

 

 

 

-

 

Repayment of long-term debt

 

 

(15,000

)

 

 

(118,000

)

Payment of debt issuance costs

 

 

(600

)

 

 

-

 

Net proceeds of notes payable

 

 

6,707

 

 

 

9,846

 

Dividends paid

 

 

(29,067

)

 

 

(26,045

)

Contingent consideration payment

 

 

(5,000

)

 

 

-

 

Proceeds from stock options exercised

 

 

13,522

 

 

 

22,053

 

Repurchases of common stock

 

 

(3,885

)

 

 

(2,668

)

Net cash provided by (used in) financing activities

 

 

301,677

 

 

 

(114,814

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(15,439

)

 

 

(3,063

)

Net change in cash and cash equivalents

 

 

(1,078

)

 

 

(32,400

)

Cash and cash equivalents at beginning of period

 

 

61,786

 

 

 

100,534

 

Cash and cash equivalents at end of period

 

$

60,708

 

 

$

68,134

 

 

Steven Brazones
Investor Relations Contact
651-236-5060

Source: H.B. Fuller Company

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